Section 285 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
After a winding-up order, the Tribunal settles a list of the people liable to contribute to the company's assets, cleans up the register of members where needed, and applies the assets to discharge liabilities. Section 285 also sets out, in five conditions, when a past member is protected and how far any member's contribution can go.
As soon as may be after the winding-up order, the Tribunal settles a list of contributories, has the register of members rectified where needed and applies the assets to the company's liabilities. It may dispense with the list if calls or adjustment of rights are not necessary. Present and past members can be included, but a past member is not liable if he ceased to be a member one year or more before winding up began, nor for debts contracted after he left. For a limited-by-shares company, liability is capped at the unpaid amount on the shares.
Context after the IBC
Since the Insolvency and Bankruptcy Code, 2016, inability to pay debts and voluntary winding up are dealt with under the IBC. Winding up by the Tribunal under the Companies Act continues on the grounds left in section 271. When that happens, section 285 decides who has to put money in if the company's assets do not cover its debts. It follows the liquidator's report and custody steps in sections 281–282 and sections 283–284.
If you are a current or former shareholder and have been told you may be a contributory, our legal dispute resolution team can help you check whether and how far you are liable.
Sub-sections (1) and (2): what the Tribunal does
- Settle the list. "As soon as may be after the passing of a winding up order", the Tribunal settles a list of contributories.
- Rectify the register. It causes rectification of the register of members "in all cases where rectification is required in pursuance of this Act".
- Apply the assets. It causes the assets of the company to be applied for the discharge of its liability.
- Dispensing with the list. The proviso: where it appears that it would not be necessary to make calls on or adjust the rights of contributories, the Tribunal may dispense with the list.
- Two kinds of contributory. When settling the list, the Tribunal must distinguish those who are contributories in their own right from those who are contributories as representatives of, or liable for the debts of, others (sub-section (2)).
Sub-section (3): who is included, and the five limits
The Tribunal must include "every person, who is or has been a member", who is liable to contribute an amount sufficient for payment of the debts and liabilities, the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves. That is subject to these conditions:
| Clause | Condition |
|---|---|
| (a) | A past member is not liable if he has ceased to be a member for the preceding one year or more before the commencement of winding up |
| (b) | A past member is not liable for any debt or liability contracted after he ceased to be a member |
| (c) | A past member is not liable unless it appears to the Tribunal that the present members are unable to satisfy the contributions required |
| (d) | In a company limited by shares, no contribution beyond the amount, if any, unpaid on the shares for which he is liable as member |
| (e) | In a company limited by guarantee, no contribution beyond the amount undertaken to be contributed on winding up; but if it has share capital, the member is liable to the extent of any sum unpaid on shares held, as if the company were limited by shares |
Reading the conditions together
- Conditions (a), (b) and (c) protect past members. Each is worded as a separate bar: a past member is not liable if he left one year or more before winding up (a), not liable for debts contracted after he left (b), and not liable at all unless the present members cannot satisfy the contributions (c). A past member who falls within any of these is protected to that extent.
- Conditions (d) and (e) protect every member, present or past, by capping the amount.
- A fully paid-up shareholder of a company limited by shares therefore has no further liability under the section, because nothing is unpaid on the shares.
Why the register matters
The Tribunal rectifies the register of members where required, so the list reflects who was actually a member and when. Members who transferred shares but are still on the register, or were wrongly removed, should check their position against the statutory registers and transfer records. Our service on share transfer deals with the transfer side of this.
Directors' further liability
A separate section deals with directors or managers whose liability is unlimited under the Act. That is covered in section 286, which adds a further contribution for such a person as if he were a member of an unlimited company. Calls and set-off against contributories come later in the Act; see sections 295–298.
Who is affected
- Current shareholders with partly paid shares are the obvious contributories.
- Former shareholders need to check the one-year rule and the date their debts were contracted.
- Guarantee companies (for example some clubs and associations) need to look at the amount each member undertook.
- Creditors benefit because the list identifies who can be called upon, and assets are applied to the company's liabilities (see priority of payments).
Proposed change
The Corporate Laws (Amendment) Bill, 2026 has no clause amending section 285. Its winding-up clause touches section 271 only. The Bill is pending and is not law as on 30 September 2026.
Practical examples
Example 1: partly paid shares. A shareholder holds 1,000 shares of Rs 10 each, with Rs 6 paid. If he is on the list, his maximum contribution is the unpaid Rs 4 per share, that is Rs 4,000, under clause (d), even if the company's debts are far greater.
Example 2: a past member. A shareholder transferred all his shares 18 months before the winding-up began. Under clause (a) he is not liable, because he ceased to be a member one year or more before the commencement.
Example 3: a recent leaver. Another shareholder left six months before winding up. The one-year protection does not apply. He can be included only if clauses (b) to (e) allow it: no liability for debts contracted after he left, and only if the present members cannot satisfy the contributions.
Need help with your position as a member?
Whether you are a current shareholder or a former one, the dates of your transfer, the debts in question and the unpaid amount all matter. We can review the registers with you and explain where you stand. Speak to our team about legal dispute resolution.
Key takeaways
- The Tribunal settles the list of contributories soon after the winding-up order, and rectifies the register of members where required.
- The list may be dispensed with if calls or adjustment of rights are unnecessary.
- Past members are protected if they left one year or more before winding up, or for debts contracted after they left.
- A past member is liable only if present members cannot satisfy the contributions.
- In a limited-by-shares company, liability is capped at the unpaid amount on the shares.
- In a guarantee company, liability is capped at the amount undertaken, plus unpaid amounts on shares if it has share capital.
- The Bill, 2026 does not amend section 285 and is not law.
Read next
- Sections 283–284: Custody of company property and duty to cooperate
- Sections 286–288: Directors' obligations and advisory committee
- Sections 295–298: Contributories, calls and set-off
- Distribution of assets in winding up: priority of payments
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.